Vestoil v. M/V "M Pioneer"
DMC Rating Category: Confirmed
This case note has been prepared by Jan Petter Gisholt of Healy & Baillie, LLP in New York. Healy & Baillie are the international contributors to the website for the United States.
The contract contained no choice of law provision but contained a clause which granted Vestoil a lien on the Vessel if the bunkers were not paid. Financial Shipping never paid for the bunkers and the Vessel was eventually sold to Fairlane Shipping, a Liberian corporation, in February 2004.
In May of 2004, while the Vessel was in Port Canaveral, Florida, Vestoil filed a Rule B complaint against Financial Shipping and a Rule C complaint to enforce a maritime lien against the vessel. The Rule B2 complaint was dismissed without prejudice for lack of service. The District Court granted the vesselís motion to quash the arrest and dismissed Vestoilís Rule C1 action to foreclose the maritime lien.
The District Court conducted a choice of law analysis and concluded that Greek law controlled. The District Court found that under Greek law, a maritime lien does not exist for the provision of necessaries in spite of a contractual clause which so provides. Without the existence of a maritime lien, the District Court dismissed the Rule C complaint for lack of in rem jurisdiction over the vessel.
In its appeal, Vestoil argued that the lien clause in the bunker contract created a maritime lien and relied on a series of cases which purportedly stood for the proposition that "international contracting parties are free to negotiate these kinds of provisions as they please."
Court of Appeals Judgment
The Court ultimately concluded the District Court had properly interpreted the applicable Greek law in finding that Vestoil did not have a maritime lien despite the contractual language to the contrary. Accordingly, the District Court had properly concluded that it lacked in rem jurisdiction and properly dismissed Vestoilís Rule C complaint. The Appeals Court declined to consider Vestoilís in personam claims against Fairlane (the new owners of the Vessel) on appeal, because such claims were not raised in the District Court.
1Supplemental Admiralty Rule C of the Federal Rules of Civil Procedure contains special provisions for enforcing a maritime lien and filing an action in rem against a vessel or other maritime property subject to liens. Under Rule C, the plaintiff files a complaint and affidavit(s) asserting the validity of the lien in the US district court where the property sits. The vessel may be seized on the basis of this complaint and affidavit. If the court finds that judgment should be entered on the complaint, the US Marshall may be ordered to sell the vessel to satisfy the plaintiffís claim, absent satisfaction of the judgment by the owner.
2 Supplemental Admiralty Rule B provides for attachment and garnishment in an in personam action. Under Rule B, if the defendant is not found within the district, a plaintiff may request attachment of defendantís tangible or intangible property up to the amount sued for. Property subject to attachment may include, among other things, the vessel, a bank account, cargo or bunker fuel. A Rule B attachment is used to secure the defendantís appearance in the jurisdiction and to ensure satisfaction of the claim if the plaintiff prevails.
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